Baylor Law Review
To avoid liability, many investors in a partnership opt for the structure of a limited partnership. This structure insulates the limited partners from liability by creating a two-tier structure with a general partner and limited partners. The limited partners are at risk of losing only their investment so long as they are not acting as general partners.
Despite the popularity of the limited partnership structure, though, it remains unclear what duties are owed between the various partners. In a general partnership, all partners are fiduciaries to each other. The statutes governing limited partnerships make clear that general partners in a limited partnership continue to owe fiduciary duties to the limited partnership, but what of limited partners? Do limited partners owe duties to the limited partnership itself or to each other?
To answer this question, it is useful to review both the uniform and Texas statutes governing limited partnerships and their interplay with the law of general partnerships, with specific focus upon the duties owed by partners under both a general and limited partnership under Texas law. Coupled with examination of the decision made in McBeth v. Carpenter, this review reveals that, though Texas jurisprudence has failed to articulate a clear rule, it is consistent with the cases decided thus far and the nature of a limited partnership to only create a fiduciary duty in certain equitable circumstances.
Colin P. Marks, Limited Partnership Status and the Imposition of Fiduciary Duties in Texas, 63 Baylor L. Rev. 126 (2011).